-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QpQRsL45u9uinGSMndfx7sLXl0Q0+WhdeNGvlYoDSESYVloDYOo43qtAY4P10HCr xbUY5VYBGShTIfIC0lSv8A== 0000950135-97-003074.txt : 19970724 0000950135-97-003074.hdr.sgml : 19970724 ACCESSION NUMBER: 0000950135-97-003074 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970723 EFFECTIVENESS DATE: 19970723 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PICTURETEL CORP CENTRAL INDEX KEY: 0000755095 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 042835972 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-31917 FILM NUMBER: 97644442 BUSINESS ADDRESS: STREET 1: 100 MINUTEMAN RD CITY: ANDOVER STATE: MA ZIP: 01810 BUSINESS PHONE: 5087625000 MAIL ADDRESS: STREET 1: 222 ROSEWOOD DR CITY: DANVERS STATE: MA ZIP: 01923 FORMER COMPANY: FORMER CONFORMED NAME: PICTEL CORP DATE OF NAME CHANGE: 19870505 S-8 1 PICTURETEL CORPORATION 1 Registration No. 333-_____ As filed with the Securities and Exchange Commission on July 23, 1997 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ PICTURETEL CORPORATION (Exact Name of Registrant as Specified in its Charter) DELAWARE 04-2835972 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
100 MINUTEMAN ROAD ANDOVER, MASSACHUSETTS 01810 (Address of Principal Executive Offices, Including Zip Code) PICTURETEL CORPORATION INCENTIVE STOCK OPTION PLAN OF 1984 INCENTIVE STOCK OPTION PLAN OF 1986 1987 STOCK OPTION PLAN 1996 STOCK OPTION PLAN (Full Title of the Plan) DR. NORMAN E. GAUT 100 MINUTEMAN ROAD ANDOVER, MASSACHUSETTS 01810 (508) 292-5000 (Name, Address, and Telephone Number, Including Area Code, of Agent For Service) Please send copies of all communications to: Howard K. Fuguet, Esq. Ropes & Gray One International Place Boston, Massachusetts 02110-2624 (617) 951-7000 CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------- Title of Amount Proposed Proposed Amount of securities to be maximum maximum registration to be registered offering aggregate fee(1) registered price per offering share(1) price(1) - -------------------------------------------------------------------------------------------------------------- Common Stock(2) 174,440 $9.4375 $1,646,277.50 $498.87 - -------------------------------------------------------------------------------------------------------------- Common Stock(4) 406,095 $3.7769 $1,533,796.20 $464.79 - -------------------------------------------------------------------------------------------------------------- Total: 580,535 $963.66 - --------------------------------------------------------------------------------------------------------------
(1) Calculated pursuant to Rule 457(h). (2) Shares subject to options authorized but not yet granted pursuant to PictureTel Corporation/MultiLink Incentive Stock Option Plan of 1984, PictureTel Corporation/MultiLink Incentive Stock Option Plan of 1986, PictureTel Corporation/MultiLink 1987 Stock Option Plan and PictureTel Corporation/MultiLink 1996 Stock Option Plan (the "Plans"). (3) In addition, in accordance with Rule 416(a) under the Securities Act of 1933, as amended, this registration statement also covers such indeterminate number of shares as may become subject to options under the Plan as a result of the adjustment provisions thereof. (4) Shares subject to options previously granted pursuant to the Plans. ================================================================================ Page 1 of __ Exhibit Index at Page 10 2 PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS ITEM 1. PLAN INFORMATION.* ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.* * The document(s) containing the information required by Item 1 of this Form S-8 and the statement of availability of Registrant information, and other information required by Item 2 of this Form will be sent or given to employees as specified by Rule 428 under the Securities Act of 1933, as amended (the "Securities Act"). In accordance with Rule 428 and the requirements of Part I of Form S-8, such documents are not being filed with the Securities and Exchange Commission (the "Commission") either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 of the Securities Act. PictureTel Corporation (the "Company") shall maintain a file of such documents in accordance with the provisions of Rule 428. Upon request, the Company shall furnish to the Commission or its staff a copy of any or all of the documents included in such file. -2- 3 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The Company hereby incorporates the following documents herein by reference: (a) PictureTel's Annual Report on Form 10-K and its Amendment to the Annual Report on Form 10-K/A for the fiscal year ended December 31, 1996 (which incorporates by reference certain information from PictureTel's Proxy Statement relating to the 1997 Annual Meeting of Shareholders) (File No. 1-9434); (b) PictureTel's Proxy Statement filed with the Commission on April 28, 1997; (c) PictureTel's Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 1997; (d) PictureTel's Current Reports on Form 8-K filed with the Commission on April 18, 1997, June 18, 1997 and July 15, 1997; (e) All other reports filed pursuant to Sections 13(a) or 15(d) of the Exchange Act since December 31, 1996; and All documents subsequently filed by PictureTel pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering of the PictureTel Common Stock, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing such documents. Any statement contained herein or in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed to constitute a part of this Registration Statement, except as so modified or superseded. ITEM 4. DESCRIPTION OF SECURITIES. Not Applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. The validity of the shares of Common Stock offered hereby has been passed upon by Ropes & Gray, One International Place, Boston, Massachusetts, as counsel for the Company. -3- 4 The consolidated financial statements and the related consolidated financial statement schedule of PictureTel Corporation as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, have been incorporated by reference in this Registration Statement in reliance on the reports of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law ("DGCL") provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Section 145 further provides that a corporation similarly may indemnify any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor, against expenses (including attorney's fees) actually and reasonably incurred in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or such other court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. The Company has entered into or intends to enter into indemnification agreements, which have been approved by the stockholders, with each of the Company's directors and officers, and intends to enter into indemnification agreements with all persons who become directors or hold certain offices in the future. Indemnification is available under an indemnification agreement for actions, suits, arbitrations or proceedings commenced after the effective date of the indemnification agreement, even if the conduct in question occurred prior to that date. -4- 5 Article 6 of the Third Restated Certificate of Incorporation ("Certificate of Incorporation") provides that the Company shall, to the maximum extent possible under DGCL, indemnify and pay certain expenses incurred by a director or officer in connection with any threatened, pending or completed action, suit, arbitration or proceeding, whether civil, criminal, administrative, or investigative, and specifically including actions by or in the name of the Company ("derivative suits"), that where the individual's involvement is by reason of the fact that he or she is or was a director, or officer. Such amounts include attorneys' fees and other expenses customarily incurred in connection with the legal proceedings and, judgments, fines and amounts paid in the settlement. Any person seeking indemnification if the director or officer is found not to have met the standard of conduct required for such indemnification unless the contrary shall be established. Article 10 of the Certificate of Incorporation provides that the Company's Directors shall not be liable to the Company or its stockholders for monetary damages for any breach of fiduciary duty, except for (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith which involve intentional misconduct or a knowing violation of the law, or (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. ITEM 8. EXHIBITS. EXHIBIT NO. DESCRIPTION - ----------- ----------- 4.1 PictureTel Corporation/MultiLink Incentive Stock Option Plan of 1984 4.2 PictureTel Corporation/MultiLink Incentive Stock Option Plan of 1986 4.3 PictureTel Corporation/MultiLink 1987 Stock Option Plan 4.4 PictureTel Corporation/MultiLink 1996 Stock Option Plan 4.5 Form of Common Stock Certificate (incorporated by reference to Exhibit 4(b) to Company's Registration Statement on Form S-8, Registration Number 33-36315 effective August 10, 1990). 4.6 The Company's Third Restated Certificate of Incorporation, effective June 10, 1992 (incorporated by reference to Exhibit 3.1.4 to Company's Quarterly Report on Form 10-Q for the quarter ended June 27, 1992). 4.7 The Company's By-laws as amended September 13, 1994 (incorporated by reference to Exhibit 1 to the Company's Current Report on Form 8-K filed September 14, 1994). -5- 6 5.1 Opinion of Ropes & Gray. 23.1. Consent of Ropes & Gray (contained in its opinion filed as Exhibit 5.1 hereto). 23.2 Consent of Coopers & Lybrand L.L.P. 24. Power of Attorney (contained in Part II hereof under "Signatures and Power of Attorney"). ITEM 9. UNDERTAKINGS. (a) The undersigned Company hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration statement (or the most recent post-effective amendment thereof), which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration statement, and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Company pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. -6- 7 (h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. -7- 8 SIGNATURES AND POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8, and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Andover, the Commonwealth of Massachusetts, on this 22nd day of July, 1997. PICTURETEL CORPORATION By /s/ Dr. Norman E. Gaut ----------------------------------------- Dr. Norman E. Gaut Chief Executive Officer We, the undersigned directors of PictureTel Corporation, hereby severally constitute and appoint Norman E. Gaut and Richard B. Goldman, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities as directors, any and all amendments or supplements to the Registration Statement on Form S-8 of PictureTel Corporation, and generally to do all such things in our name and on our behalf in our capacities as directors to enable PictureTel Corporation to comply with the provisions of the Securities Act of 1933, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be required by our said attorneys or any of them, to any and all said amendments. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. /s/ Dr. Norman E. Gaut - ----------------------------- Chairman of the Board of July 22, 1997 Dr. Norman E. Gaut Directors and Chief Executive Officer (principal executive officer) /s/ Richard B. Goldman - ----------------------------- Vice President, Chief July 22, 1997 Richard B. Goldman Financial Officer (principal financial and accounting officer) /s/ Vinod Khosla - ----------------------------- Director July 22, 1997 Vinod Khosla -8- 9 /s/ Robert T. Knight - ----------------------------- Director July 22, 1997 Robert T. Knight /s/ David B. Levi - ----------------------------- Director July 22, 1997 David B. Levi /s/ Enzo Torresi - ----------------------------- Director July 22, 1997 Enzo Torresi -9- 10 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 4.1 Form of PictureTel Corporation/MultiLink Incentive Stock Option Plan of 1984 4.2 Form of PictureTel Corporation/MultiLink Incentive Stock Option Plan of 1986 4.3 Form of PictureTel Corporation/MultiLink 1987 Stock Option Plan 4.4 Form of PictureTel Corporation/MultiLink 1996 Stock Option Plan 5.1 Opinion of Ropes & Gray. 23.1. Consent of Ropes & Gray (contained in its opinion filed as Exhibit 5.1 hereto). 23.2 Consent of Coopers & Lybrand L.L.P. 24. Power of Attorney (contained in Part II hereof under "Signatures and Power of Attorney").
-10- EX-4.1 2 PICTURETEL/MULTILINK INCENTIVE STK. OPT. PLN. 1984 1 EXHIBIT 4.1 PICTURETEL CORPORATION/MULTILINK -------------------------------- AMENDMENT TO ------------ INCENTIVE STOCK OPTION PLAN OF 1984 ----------------------------------- This Amendment to Incentive Stock Option Plan of 1984 is executed by MULTILINK, INC., a Massachusetts corporation having a principal place of business in Andover, Massachusetts (the "Company"). W I T N E S S E T H - - - - - - - - - - WHEREAS, the Company established the Incentive Stock Option Plan of 1984 effective October 11, 1984 (the "Plan") in order to enable it to grant incentive stock options to employees; WHEREAS, the Company now desires to grant non-qualified stock options and other stock rights under the Plan in addition to incentive stock options; and WHEREAS, in order to accomplish the foregoing the Company desires to amend and restate the Plan in its entirety; NOW, THEREFORE, the Company hereby amends and restates the Incentive Stock Option Plan of 1984 to provide as follows: PICTURETEL CORPORATION/MULTILINK 1984 RESTATED STOCK PLAN ------------------------ 1. PURPOSES. This Plan is designed to enable MULTILINK, INC., a Massachusetts corporation with its principal place of business located in Andover, Massachusetts (the "Company") and its Affiliates to continue to be able to attract and retain persons of ability as key employees, officers, directors and consultants and to motivate such persons to exert their best efforts on behalf of the Company and its Affiliates by providing them with opportunities to purchase stock in the Company, all in the manner provided herein. 2. DEFINITIONS. "Affiliate" means any corporation which owns fifty percent (50%) of the voting power of the Company or any other corporation (other than the Company) in an unbroken chain of corporation beginning with the Corporation if each of the corporations other than the last in 2 such chain owns stock possessing at least fifty percent (50%) of the voting power in one of the other corporations in such chain. "Board" means the Board of Directors of the Company. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the committee established to administer the Plan as provided in Section 3(a). "Common Stock" means shares of common stock of the Company ($.01 par value) and such other stock as shall be substituted therefor as provided in Section 14. "Company" shall have the meaning set forth in Section 1 hereof. "Date of Grant" means the date on which the Committee authorizes the granting of a Option or such later date as may be specified by the Committee at the time of such authorization; provided, however, that with respect to Options granted pursuant to Section 3(d) such term shall mean the date on which the granting of such Option is authorized by the Board or by the committee established pursuant to Section 3(d) to whom the Board has delegated such authority. "Disability" shall mean "Permanent and Total Disability" as defined in Section 22(e)(3) of the Code. "Disqualifying Disposition" shall have the meaning set forth in Section 21. "Eligible Recipient" means a person who satisfies the eligibility requirements of Section 4 applicable to the Option proposed to be granted to him. "Grantee" means an Eligible Recipient to whom an Option has been granted under this Plan. "ISO" means an Option which qualifies as an incentive stock option under Section 422A(b) of the Code. "Non-Qualified Option" means an Option which does not qualify as an ISO. "Option" means a right to purchase Common Stock granted to an Eligible Recipient pursuant to this Plan. "Plan" means the PICTURETEL CORPORATION/MULTILINK 1984 Restated Stock Plan. -2- 3 "Stock Option Agreement" means the agreement executed between the Corporation and a Grantee pursuant to Section 13. 3. ADMINISTRATION OF THE PLAN. (a) The Committee shall administer the Plan and shall consist of the Board or of not less than three members of the Board who shall be appointed by and serve at the pleasure of the Board. No member of the Committee, while a member, shall be eligible to participate in the Plan except as provided in Section 3(c) hereof. Subject to ratification of the grant or authorization of each Option by the Board (if so required by applicable state law), and subject to the terms of the Plan, the Committee, if so appointed, shall have the authority to (i) determine the employees of the Company and its Affiliates (from among the class of employees eligible under Section 4 to receive ISOs) to whom ISOs may be granted and to determine (from among the class of individuals and entitles eligible under Section 4 to receive Non-Qualified Options) to whom Non-Qualified Options may be granted; (ii) determine the time or times at which Options may be granted; (iii) determine the option price of shares subject to each Option; (iv) determine whether each Option granted shall be an ISO or a Non-Qualified Option; (v) determine (subject to Section 8) the time or times when each Option shall become exercisable and the duration of the exercise period; (vi) determine whether restrictions such as repurchase options are to be imposed on shares subject to Options and the nature of such restrictions, if any; and (vii) interpret the Plan and prescribe and rescind rules and regulations relating to it. If the Committee decides to grant a Non-Qualified Option, it shall take whatever actions it deems necessary, under Section 422A of the Code and the regulations promulgated thereunder, to ensure that such Option is not treated as an ISO. The interpretation and construction by the Committee of any provisions of the Plan or of any Option granted under it shall be final unless otherwise determined by the Board. The Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may deem best. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted under it. (b) The Committee may select one of its members as its chairman, and shall hold meetings at such time and places as it may determine. A majority of the Committee shall constitute a quorum. The acts of a majority of the members of the Committee present at any meeting at which a quorum is present or acts reduced to or approved in writing by a majority of the members of the Committee shall be the valid acts of the Committee. All references in this Plan to the Committee shall mean the Board if no Committee has been appointed. From time to time the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan. -3- 4 (c) Options may be granted to members of the Committee if such grants have been approved by a majority vote of the members of the Board not then serving on the Committee. All grants of Options to members of the Committee shall in all other respects be made in accordance with the provisions of this Plan applicable to other eligible persons. Members of the Board who are either (i) eligible for Options pursuant to the Plan or (ii) have been granted Options under the Plan may vote on any matters affecting the administration of the Plan or the grant of any Options pursuant to the Plan, except that no such member shall act upon the granting to himself of Options, but any such member may be counted in determining the existence of a quorum at any meeting of the Board during which action is taken with respect to the granting to him of Options. (d) Notwithstanding any other provision of this Section 3, in the event the Company registers any class of any equity security pursuant to section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any grants of Options to directors made at any time from the effective date of such registration until six months after the termination of such registration until six months after the termination of such registration shall be made only by the Board; provided, however, that if a majority of the Board is eligible to participate in the Plan or in any other stock option or other stock plan of the Company or any Affiliate, or has been so eligible at any time within the preceding year, any grant to directors of Options must be made by, or only in accordance with the recommendation of, a committee consisting of three or more persons, who may but need not be directors or employees of the Company, appointed by the Board but having full authority to act in the matter, none of whom is eligible to participate in this Plan or any other stock option or other stock plan of the Company or any Affiliate, or has been eligible at any time within the preceding year. The requirements imposed by the preceding sentence shall also apply with respect to grants to officers who are not also directors. Once appointed, such committee shall continue to serve until otherwise directed by the Board. 4. ELIGIBILITY REQUIREMENTS. ISOs may be granted to any employee of the Company or any Affiliate. Those officers and directors of the Company or any Affiliate who are not employees may not be granted ISOs under the Plan. Non-Qualified Options may be granted to any director (whether or not an employee), officer, employee or consultant of the Company or any Affiliate. The Committee may take into consideration a candidate's individual circumstances in determining whether to grant an ISO or a Non-Qualified Option. The granting of any Option to any individual or entity shall neither entitle that individual or entity to, nor disqualify him from, participation in any other grant of Options. 5. STOCK. The aggregate number of shares of Common Stock which may be issued pursuant to the Plan is 60,000, subject to adjustment as provided in Section 14. The Committee may grant ISOs and Non-Qualified Options with respect to such shares in such -4- 5 combinations and for such amount of shares as it shall desire, provided that the number of shares issuable upon exercise of such Options does not exceed such number, as adjusted. Stock subject to Options may be authorized but unissued shares of Common Stock or Common Stock held in the treasury of the Company. If any Option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the unpurchased shares subject to such Option shall again be available for grants of Options under the Plan. 6. GRANTING OF OPTIONS. The Committee is authorized to grant Options under the Plan at such time or times as it may determine, provided that the Committee shall not grant Options under the Plan after October 10, 1994. The Committee shall have the right, with the consent of the Grantee, to convert an ISO granted under the Plan to a Non-Qualified Option pursuant to Article 17. 7. MINIMUM OPTION PRICE; ISO LIMITATIONS. A. The exercise price specified in the Stock Option Agreement relating to each ISO granted under the Plan shall not be less than the fair market value per share of Common Stock on the Date of Grant. In the case of an ISO to be granted to an Eligible Recipient owning stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Affiliate, the exercise price specified in the Stock Option Agreement relating to such ISO shall not be less than 110 percent of the fair market value per share of Common Stock on the Date of Grant. B. In no event shall the aggregate fair market value (determined at the time an ISO is granted) of Common Stock for which ISOs granted to any Eligible Recipient are exercisable for the first time by such Eligible Recipient during any calendar year (under all stock option plans of the Company and any Affiliate) exceed $100,000. C. If on the Date of Grant the Company's Common Stock is publicly traded, "fair market value" shall be determined as of the last business day for which the prices or quotes discussed in this sentence are available prior to the Date of Grant and shall mean (i) the average (on that date) of the high and low prices of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; or (ii) the last reported sale price (on that date) of the Common Stock on the NASDAQ National Market System, if the Common Stock is not then traded on a national securities exchange; or (iii) the closing bid price (or average of bid prices) last quoted (on that date) by an established quotation service for over-the-counter securities, if the Common Stock is not reported on the NASDAQ National Market System. However, if the Common Stock is not publicly traded on the Date of Grant, "fair market value" shall be deemed to be the fair value of the Common Stock on the Date of Grant as determined by the Committee after taking into consideration all factors which it deems appropriate, -5- 6 including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm's length. 8. OPTION DURATION. Subject to earlier termination as provided in Sections 10 and 11, each Option shall expire on the date specified by the Committee, but not more than (i) ten years and one day from the Date of Grant in the case of Non-Qualified Options, (ii) ten years from the Date of Grant in the case of ISOs generally, and (iii) five years from the Date of Grant in the case of ISOs granted to an employee owning stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Affiliate. Subject to earlier termination as provided in Sections 10 and 11, the term of each ISO shall be the term set forth in the Stock Option Agreement granting such ISO, unless any part of such ISO is converted into a Non-Qualified Option pursuant to Section 17 and pursuant to such conversion the Committee elects to extend the exercise period applicable to such part. 9. EXERCISE OF OPTION. Subject to the provisions of Sections 10 through 13, each Option granted under the Plan shall be exercisable as follows: A. The Option shall either be fully exercisable on the Date of Grant or shall become exercisable thereafter in such installments as the Committee may specify. B. Once an installment becomes exercisable it shall remain exercisable until expiration or termination of the Option, unless otherwise specified by the Committee. C. Each Option or installment may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares with respect to which it is then exercisable. D. The Committee shall have the right to accelerate the date of exercise of any installment of any Option; provided that the Committee shall not accelerate the exercise date of any installment of any Option granted to any employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to paragraph Section 17) if such acceleration would violate the annual vesting limitation contained in Section 422A(b)(7) of the Code, as described in Section 7(B). 10. TERMINATION OF EMPLOYMENT. If the Grantee of an ISO ceases to be employed by the Company and all Affiliates other than by reason of death or disability, no further installments of such Grantee's ISOs shall become exercisable, and the Grantee's ISOs shall terminate after the passage of 90 days from the date of termination of his or her employment, but in no event later than on their specified expiration dates, except to the extent that such ISOs (or unexercised installments thereof) have been converted into Non-Qualified Options pursuant to Section 17. Leave of absence with the written approval of the Committee shall not be considered an interruption of employment under the Plan, provided that such written approval contractually obligates the Company or any Affiliate to continue the employment of -6- 7 the employee after the approved period of absence. Employment shall also be considered as continuing uninterrupted during any other bona fide leave of absence (such as those attributable to illness, military obligations or governmental service) provided that the period of such leave does not exceed 90 days or, if longer, any period during which such Grantee's right to reemployment is guaranteed by statute. ISOs granted under the Plan shall not be affected by any change of employment within or among the Company and its Affiliates, so long as the Grantee continues to be an employee of the Company or any Affiliate. Nothing in the Plan shall be deemed to give any Grantee of any Option the right to be retained in employment or other service by the Company or any Affiliate for any period of time. 11. DEATH; DISABILITY. If the Grantee of an ISO ceases to be employed by the Company and all Affiliates by reason of his death, any ISO previously granted hereunder to such Grantee may be exercised, to the extent of the number of shares with respect to which the Grantee could have exercised it on the date of his or her death, by the Grantee's estate, personal representative or any beneficiary who has acquired the ISO by will or by the laws of descent and distribution, at any time prior to the earlier of the ISO's specified expiration date or 365 days from the date of the Grantee's death. If the Grantee of an ISO ceases to be employed by the Company and all Affiliates by reason of his Disability, the Grantee shall have the right to exercise any ISO held by him on the date of termination of employment, to the extent of the number of shares with respect to which the Grantee could have exercised it on that date, at any time prior to the earlier of the ISO's specified expiration date or 365 days from the date of the termination of the Grantee employment. 12. ASSIGNABILITY. No Option shall be assignable or transferable by the Grantee thereof except by will or by the laws of descent and distribution, and during the lifetime of the Grantee each Option shall be exercisable only by him. 13. TERMS AND CONDITIONS OF OPTIONS. Each Option granted under the Plan shall be evidenced by a Stock Option Agreement in such form as the Committee may from time to time approve. Each Stock Option Agreement shall conform to the terms and conditions set forth in Sections 7 through 12 hereof and may contain such other provisions (which may vary as between Grantees) as the Committee deems advisable, including restrictions applicable to shares of Common Stock issuable upon exercise of Options, provided such provisions are not inconsistent with the terms of this Plan. The Committee may, in its discretion, make some or all of the Non-Qualified Options granted under this Plan subject to the restrictions set forth herein with respect to ISOs, or to such other termination and cancellation provisions as the Committee may determine. The Committee may from time to time confer authority and responsibility on one or more of its own members and/or one or more officers of the Company to execute and deliver Stock Option Agreements. The proper officers of the Company are authorized and directed to take any and all action necessary or advisable from time to time to carry out the terms of each Stock Option Agreement entered into pursuant to this Plan. -7- 8 14. ADJUSTMENTS. Upon the happening of any of the following described events, a Grantee's rights with respect to Options granted hereunder and with respect to Common Stock acquired pursuant to exercise of a Option granted hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in any written agreement between the Grantee and the Company relating to such Option. A. In the event shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if, upon a merger, consolidation, reorganization, split-up, liquidation, combination, recapitalization or the like of the Company, the shares of Common Stock shall be exchanged for other securities of the Company or of another corporation, each Grantee of an Option shall be entitled, subject to the conditions herein stated, to purchase such number of shares of Common Stock or amount of other securities of the Company or such other corporation as were exchangeable for the number of shares of Common Stock which such Grantee would have been entitled to purchase except for such action, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or exchange; and B. In the event the Company shall issue any of its shares as a stock dividend upon or with respect to the shares of stock of the class which at the time shall be subject to an Option hereunder, each Grantee upon exercising an Option shall be entitled to receive (for the purchase price paid upon such exercise) the shares as to which he is exercising his Option and, in addition thereto (at no additional cost), such number of shares of the class or classes in which such stock dividend or dividends were declared or paid, and such amount of cash in lieu of fractional shares, as he would have received if he had been the holder of the shares as to which he is exercising his Option at all times between the date of grant of such Option and the date of its exercise. C. If any person or entity owning restricted Common Stock obtained by exercise of an Option made hereunder receives new or additional or different shares or securities in connection with a corporate transaction described in paragraph A above or a stock dividend described in paragraph B above as a result of owning such restricted Common Stock, such new or additional or different shares or Securities shall be subject to all of the conditions and restrictions applicable to the restricted Common Stock with respect to which such shares or securities were issued. D. Notwithstanding the foregoing, any adjustments made pursuant to paragraphs A or B with respect to ISOs shall be made only after the Committee, after consulting with counsel for the Company, determines whether such adjustments would constitute a "modification" of such ISOs (as that term is defined in Section 425 of the Code) or would cause any adverse tax consequences for the Grantees of such ISOs. If -8- 9 the Committee determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments. E. No adjustments shall be made for dividends paid in cash or in property other than securities of the Company. F. No fractional shares shall be issued under the Plan. Any fractional shares which, but for this paragraph F, would have been issued to a Grantee pursuant to an Option shall be deemed to have been issued and immediately sold to the Company for their fair market value, and the Grantee shall receive from the Company cash in lieu of such fractional shares. G. Upon the happening of any of the events described in paragraphs A or B above, the class and the aggregate number of shares set forth in Section 5 hereof shall be appropriately adjusted to reflect the events described in such paragraphs. The Committee shall determine the specific adjustments to be made under this Section 14 and, subject to Section 3, its determination shall be conclusive. 15. MEANS OF EXERCISING STOCK RIGHTS. An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office address. Such notice shall identify the Option being exercised and specify the number of shares as to which such Option is being exercised, accompanied by full payment of the purchase price therefor either (a) in United States dollars in cash or by check, or (b) at the discretion of the Committee, through delivery of shares of Common Stock having fair market value equal as of the date of the exercise to the cash exercise price of the Option, or (c) at the discretion of the Committee, by delivery of the Grantee's personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in ss.1274(d) of the Code, or (d) at the discretion of the Committee, by any combination of (a), (b) and (c) above. If the Committee exercises its discretion to permit payment of the exercise price of an ISO by means of the methods set forth in clauses (b), (c), or (d) of the preceding sentence, such discretion shall be exercised in writing at the time of the grant of the ISO in question. The holder of an Option shall not have the rights of a shareholder with respect to the shares covered by his Option until the date of issuance of a stock certificate to him for such shares. Except as expressly provided above in Section 14 with respect to changes in capitalization and stock dividends, no adjustment shall be made for dividends or similar rights for which the record date is before the date such stock certificate is issued. 16. TERM AND AMENDMENT OF PLAN. A. This Plan shall expire on October 11, 1994 (except as to Options outstanding on that date). Options may be granted under the Plan prior to the date of stockholder approval of the Plan. -9- 10 B. The Board may terminate or amend the Plan in any respect at any time, except that the Board may not (a) increase the total number of shares that may be issued under the Plan (except by adjustment Pursuant to Section 14); (b) modify the provisions of Section 4 regarding eligibility for grants of ISOs; (c) modify the provisions of Section 7(A) regarding the exercise price (except by adjustment pursuant to Section 14); or (d) extend the expiration date of the Plan without obtaining the approval of the Company's Stockholders within 12 months before or after any such amendment. Except as provided in the last sentence of paragraph A of this section, in no event may action of the Board or Stockholder alter or impair the rights of a Grantee, without his consent, under any Option previously granted to him. 17. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs. The Committee, at the written request of any Grantee, may in its discretion take such actions as may be necessary to convert such Grantee's ISOs (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Grantee is an employee of the Company or any Affiliate at the time of such conversion. Such actions may include, but not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such Options. At the time of such conversion, the Committee (with the consent of the Grantee) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Committee in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in this Plan shall be deemed to give any Grantee the right to have such Grantee's ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Committee takes appropriate action. The Committee, with the consent of the Grantee, may also terminate any portion of any ISO that has not been exercised at the time of such termination. 18. APPLICATION OF FUNDS. The proceeds received by the Company from the sale of shares pursuant to Options granted under the Plan shall be used for general corporate purposes. 19. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver shares of the Common Stock under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such shares. 20. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a Non-Qualified Option, the making of a Disqualifying Disposition or the vesting of restricted Common Stock acquired on the exercise of an Option hereunder, the Company, in accordance with Section 3402(a) of the Code, may require such Grantee to pay additional withholding taxes in respect of the amount that is considered compensation includable in the Grantee's gross income. The Committee in its discretion may condition the exercise of a Non-Qualified Option or the vesting of restricted Common Stock acquired by exercising an Option on the Grantee's payment of such additional withholding taxes. -10- 11 21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each Stock Option Agreement entered into between the Company and the Grantee of an ISO granted under this Plan shall provide that the Grantee agrees to notify the Company in writing immediately after the Grantee makes a Disqualifying Disposition of any Common Stock acquired pursuant to the exercise of such ISO. A Disqualifying Disposition is any disposition (including any sale) by the Grantee of an ISO of Common Stock acquired pursuant to the exercise of such ISO before the later of (a) two years after the Date of Grant of such ISO or (b) one year after the date the Grantee acquired such Common Stock by exercising the ISO, provided, however, that the foregoing rules shall not apply to dispositions of such Common Stock after the death of such Grantee by his or her legal representative, devisees or heirs. 22. GOVERNING LAW; CONSTRUCTION. The validity and construction of the Plan and Stock Option Agreements entered into hereunder shall be governed by the laws of the Commonwealth of Massachusetts. In construing this Plan, the singular shall include the plural and the masculine gender shall include the feminine and neuter, unless the context otherwise requires. -11- EX-4.2 3 PICTURETEL/MULTILINK INCENTIVE STK. OPT. PLN. 1986 1 EXHIBIT 4.2 PICTURETEL CORPORATION/MULTILINK -------------------------------- AMENDMENT TO ------------ INCENTIVE STOCK OPTION PLAN OF 1986 ----------------------------------- This Amendment to Incentive Stock Option Plan of 1986 is executed by MULTILINK, INC., a Massachusetts corporation having a principal place of business in Andover, Massachusetts (the "Company"). W I T N E S S E T H - - - - - - - - - - WHEREAS, the Company established the Incentive Stock Option Plan of 1986 effective February 14, 1986 (the "Plan") in order to enable it to grant incentive stock options to employees; WHEREAS, the Company now desires to grant non-qualified stock options and other stock rights under the Plan in addition to incentive stock options; and WHEREAS, in order to accomplish the foregoing the Company desires to amend and restate the Plan in its entirety; NOW, THEREFORE, the Company hereby amends and restates the Incentive Stock Option Plan of 1986 to provide as follows: PICTURETEL CORPORATION/MULTILINK 1986 RESTATED STOCK PLAN ------------------------ 1. PURPOSES. This Plan is designed to enable MULTILINK, INC., a Massachusetts corporation with its principal place of business located in Andover, Massachusetts (the "Company") and its Affiliates to continue to be able to attract and retain persons of ability as key employees, officers, directors and consultants and to motivate such persons to exert their best efforts on behalf of the Company and its Affiliates by providing them with opportunities to purchase stock in the Company, all in the manner provided herein. 2. Definitions. ----------- "Affiliate" means any corporation which owns fifty percent (50%) of the voting power of the Company or any other corporation (other than the Company) in an unbroken chain of corporation beginning with the Corporation if each of the corporations other than the last in 2 such chain owns stock possessing at least fifty percent (50%) of the voting power in one of the other corporations in such chain. "Board" means the Board of Directors of the Company. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the committee established to administer the Plan as provided in Section 3(a). "Common Stock" means shares of common stock of the Company ($.01 par value) and such other stock as shall be substituted therefor as provided in Section 14. "Company" shall have the meaning set forth in Section 1 hereof. "Date of Grant" means the date on which the Committee authorizes the granting of an Option or such later date as may be specified by the Committee at the time of such authorization; provided, however, that with respect to Options granted pursuant to Section 3(d) such term shall mean the date on which the granting of such Option is authorized by the Board or by the committee established pursuant to Section 3(d) to whom the Board has delegated such authority. "Disability" shall mean "Permanent and Total Disability" as defined in Section 22(e)(3) of the Code. "Disqualifying Disposition" shall have the meaning set forth in Section 21. "Eligible Recipient" means a person who satisfies the eligibility requirements of Section 4 applicable to the Option proposed to be granted to him. "Grantee" means an Eligible Recipient to whom an Option has been granted under this Plan. "ISO" means an Option which qualifies as an incentive stock option under Section 422A(b) of the Code. "Non-Qualified Option" means an Option which does not qualify as an ISO. "Option" means a right to purchase Common Stock granted to an Eligible Recipient pursuant to this Plan. "Plan" means the PICTURETEL CORPORATION/MULTILINK 1986 Restated Stock Plan. -2- 3 "Stock Option Agreement" means the agreement executed between the Corporation and a Grantee pursuant to Section 13. 3. Administration of the Plan. -------------------------- (a) The Committee shall administer the Plan and shall consist of the Board or of not less than three members of the Board who shall be appointed by and serve at the pleasure of the Board. No member of the Committee, while a member, shall be eligible to participate in the Plan except as provided in Section 3(c) hereof. Subject to ratification of the grant or authorization of each Option by the Board (if so required by applicable state law), and subject to the terms of the Plan, the Committee, if so appointed, shall have the authority to (i) determine the employees of the Company and its Affiliates (from among the class of employees eligible under Section 4 to receive ISOs) to whom ISOs may be granted and to determine (from among the class of individuals and entities eligible under Section 4 to receive Non-Qualified Options) to whom Non-Qualified Options may be granted; (ii) determine the time or times at which Options may be granted; (iii) determine the option price of shares subject to each Option; (iv) determine whether each Option granted shall be an ISO or a Non-Qualified Option; (v) determine (subject to Section 8) the time or times when each Option shall become exercisable and the duration of the exercise period; (vi) determine whether restrictions such as repurchase options are to be imposed on shares subject to Options and the nature of such restrictions, if any; and (vii) interpret the Plan and prescribe and rescind rules and regulations relating to it. If the Committee decides to grant a Non-Qualified Option, it shall take whatever actions it deems necessary, under Section 422A of the Code and the regulations promulgated thereunder, to ensure that such Option is not treated as an ISO. The interpretation and construction by the Committee of any Provisions of the Plan or of any Option granted under it shall be final unless otherwise determined by the Board. The Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may deem best. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted under it. (b) The Committee may select one of its members as its chairman, and shall hold meetings at such time and places as it may determine. A majority of the Committee shall constitute a quorum. The acts of a majority of the members of the Committee present at any meeting at which a quorum is present or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee. All references in this Plan to the Committee shall mean the Board if no Committee has been appointed. From time to time the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan. (c) Options may be granted to members of the Committee if such grants have been approved by a majority vote of the members of the Board not then serving on the -3- 4 Committee. All grants of Options to members of the Committee shall in all other respects be made in accordance with the provisions of this Plan applicable to other eligible persons. Members of the Board who are either (i) eligible for Options pursuant to the Plan or (ii) have been granted Options under the Plan may vote on any matters affecting the administration of the Plan or the grant of any Options pursuant to the Plan, except that no such member shall act upon the granting to himself of Options, but any such member may be counted in determining the existence of a quorum at any meeting of the Board during which action is taken with respect to the granting to him of Options. (d) Notwithstanding any other provision of this Section 3, in the event the Company registers any class of any equity security pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any grants of Options to directors made any time from the effective date of such registration until six months after the termination of such registration shall be made only by the Board; provided, however, that if a majority of the Board is eligible to participate in the Plan or in any other stock option or other stock plan of the Company or any Affiliate, or has been so eligible at any time within the preceding year, any grant to directors of Options must be made by, or only in accordance with the recommendation of, a committee consisting of three or more persons, who may but need not be directors or employees of the Company, appointed by the Board but having full authority to act in the matter, none of whom is eligible to participate in this Plan or any other stock option or other stock plan of the Company or any Affiliate, or has been eligible at any time within the preceding year. The requirements imposed by the preceding sentence shall also apply with respect to grants to officers who are not also directors. Once appointed, such committee shall continue to serve until otherwise directed by the Board. 4. ELIGIBILITY REQUIREMENTS. ISOs may be granted to any employee of the Company or any Affiliate. Those officers and directors of the Company or any Affiliate who are not employees may not be granted ISOs under the Plan. Non-Qualified Options may be granted to any director (whether or not an employee), officer, employee or consultant of the Company or any Affiliate. The Committee may take into consideration a candidate's individual circumstances in determining whether to grant an ISO or a Non-Qualified Option. The granting of any Option to any individual or entity shall neither entitle that individual or entity to, nor disqualify him from, participation in any other grant of Options. 5. STOCK. The aggregate number of shares of Common Stock which may be issued pursuant to the Plan is 20,000, subject to adjustment as provided in Section 14. The Committee may grant ISOs and Non-Qualified Options with respect to such shares in such combinations and for such amount of shares as it shall desire, provided that the number of shares issuable upon exercise of such Options does not exceed such number, as adjusted. Stock subject to Options may be authorized but unissued shares of Common Stock or Common Stock held in the treasury of the Company. If any Option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason -4- 5 to be exercisable in whole or in part, the unpurchased shares subject to such Option shall again be available for grants of Options under the Plan. 6. GRANTING OF OPTIONS. The Committee is authorized to grant Options under the Plan at such time or times as it may determine, provided that the Committee shall not grant Options under the Plan after February 13, 1996. The Committee shall have the right, with the consent of the Grantee, to convert an ISO granted under the Plan to a Non-Qualified Option pursuant to Article 17. 7. Minimum Option Price; ISO Limitations. ------------------------------------- A. The exercise price specified in the Stock Option Agreement relating to each ISO granted under the Plan shall not be less than the fair market value per share of Common Stock on the Date of Grant. In the case of an ISO to be granted to an Eligible Recipient owning stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Affiliate, the exercise price specified in the Stock Option Agreement relating to such ISO shall not be less than 110 percent of the fair market value per share of Common Stock on the Date of Grant. B. In no event shall the aggregate fair market value (determined at the time an ISO is granted) of Common Stock for which ISOs granted to any Eligible Recipient are exercisable for the first time by such Eligible Recipient during any calendar year (under all stock option plans of the Company and any Affiliate) exceed $100,000. C. If on the Date of Grant the Company's Common Stock is publicly traded, "fair market value" shall be determined as of the last business day for which the prices or quotes discussed in this sentence are available prior to the Date of Grant and shall mean (i) the average (on that date) of the high and low prices of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; or (ii) the last reported sale price (on that date) of the Common Stock on the NASDAQ National Market System, if the Common Stock is not then traded on a national securities exchange; or (iii) the closing bid price (or average of bid prices) last quoted (on that date) by an established quotation service for over-the-counter securities, if the Common Stock is not reported on the NASDAQ National Market System. However, if the Common Stock is not publicly traded on the Date of Grant, "fair market value" shall be deemed to be the fair value of the Common Stock on the Date of Grant as determined by the Committee after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm's length. 8. OPTION DURATION. Subject to earlier termination as provided in Sections 10 and 11, each Option shall expire on the date specified by the Committee, but not more than (i) ten years and one day from the Date of Grant in the case of Non-Qualified Options, (ii) ten years -5- 6 from the Date of Grant in the case of ISOs generally, and (iii) five years from the Date of Grant in the case of ISOs granted to an employee owning stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Affiliate. Subject to earlier termination as provided in Sections 10 and 11, the term of each ISO shall be the term set forth in the Stock Option Agreement granting such ISO, unless any part of such ISO is converted into a Non-Qualified Option pursuant to Section 17 and pursuant to such conversion the Committee elects to extend the exercise period applicable to such part. 9. EXERCISE OF OPTION. Subject to the provisions of Sections 10 through 13, each Option granted under the Plan shall be exercisable as follows: A. The Option shall either be fully exercisable on the Date of Grant or shall become exercisable thereafter in such installments as the Committee may specify. B. Once an installment becomes exercisable it shall remain exercisable until expiration or termination of the Option, unless otherwise specified by the Committee. C. Each Option or installment may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares with respect to which it is then exercisable. D. The Committee shall have the right to accelerate the date of exercise of any installment of any Option; provided that the Committee shall not accelerate the exercise date of any installment of any Option granted to any employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to paragraph Section 17) if such acceleration would violate the annual vesting limitation contained in Section 422A(b)(7) of the Code, as described in Section 7(B). 10. TERMINATION OF EMPLOYMENT. If the Grantee of an ISO ceases to be employed by the Company and all Affiliates other than by reason of death or disability, no further installments of such Grantee's ISOs shall become exercisable, and the Grantee's ISOs shall terminate after the passage of 90 days from the date of termination of his or her employment, but in no event later than on their specified expiration dates, except to the extent that such ISOs (or unexercised installments thereof) have been converted into Non-Qualified Options pursuant to Section 17. Leave of absence with the written approval of the Committee shall not be considered an interruption of employment under the Plan, provided that such written approval contractually obligates the Company or any Affiliate to continue the employment of the employee after the approved period of absence. Employment shall also be considered as continuing uninterrupted during any other bona fide leave of absence (such as those attributable to illness, military obligations or governmental service) provided that the period of such leave does not exceed 90 days or, if longer, any period during which such Grantee's right -6- 7 to reemployment is guaranteed by statute. ISOs granted under the Plan shall not be affected by any change of employment within or among the Company and its Affiliates, so long as the Grantee continues to be an employee of the Company or any Affiliate. Nothing in the Plan shall be deemed to give any Grantee of any Option the right to be retained in employment or other service by the Company or any Affiliate for any period of time. 11. DEATH; DISABILITY. If the Grantee of an ISO ceases to be employed by the Company and all Affiliates by reason of his death, any ISO previously granted hereunder to such Grantee may be exercised, to the extent of the number of shares with respect to which the Grantee could have exercised it on the date of his or her death, by the Grantee's estate, personal representative or any beneficiary who has acquired the ISO by will or by the laws of descent and distribution, at any time prior to the earlier of the ISO's specified expiration date of 365 days from the date of the Grantee's death. If the Grantee of an ISO ceases to be employed by the Company and all Affiliates by reason of his Disability, the Grantee shall have the right to exercise any ISO held by him on the date of termination of employment, to the extent of the number of shares with respect to which the Grantee could have exercised it on that date, at any time prior to the earlier of the ISO's specified expiration date or 365 days from the date of the termination of the Grantee employment. 12. ASSIGNABILITY. No Option shall be assignable or transferable by the Grantee thereof except by will or by the laws of descent and distribution, and during the lifetime of the Grantee each Option shall be exercisable only by him. 13. TERMS AND CONDITIONS OF OPTIONS. Each Option granted under the Plan shall be evidenced by a Stock Option Agreement in such form as the Committee may from time to time approve. Each Stock Option Agreement shall conform to the terms and conditions set forth in Section 7 through 12 hereof and may contain such other provisions (which may vary as between Grantees) as the Committee deems advisable, including restrictions applicable to shares of Common Stock issuable upon exercise of Options, provided such provisions are not inconsistent with the terms of this Plan. The Committee may, in its discretion, make some or all of the Non-Qualified Options granted under this Plan subject to the restrictions set forth herein with respect to ISOs, or to such other termination and cancellation provisions as the Committee may determine. The Committee may from time to time confer authority and responsibility on one or more of its own members and/or one or more officers of the Company to execute and deliver Stock Option Agreements. The proper officers of the Company are authorized and directed to take any and all action necessary or advisable from time to time to carry out the terms of each Stock Option Agreement entered into pursuant to this Plan. 14. ADJUSTMENTS. Upon the happening of any of the following described events, a Grantee's rights with respect to Options granted hereunder and with respect to Common Stock acquired pursuant to exercise of a Option granted hereunder shall be adjusted as hereinafter -7- 8 provided, unless otherwise specifically provided in any written agreement between the Grantee and the Company relating to such Option. A. In the event shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if, upon a merger, consolidation, reorganization, split-up, liquidation, combination, recapitalization or the like of the Company, the shares of Common Stock shall be exchanged for other securities of the Company or of another corporation, each Grantee of an Option shall be entitled, subject to the conditions herein stated, to purchase such number of shares of Common Stock or amount of other securities of the Company or such other corporation as were exchangeable for the number of shares of Common Stock which such Grantee would have been entitled to purchase except for such action, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or exchange; and B. In the event the Company shall issue any of its shares as a stock dividend upon or with respect to the shares of stock of the class which at the time shall be subject to an Option hereunder, each Grantee upon exercising an Option shall be entitled to receive (for the purchase price paid upon such exercise) the shares as to which he is exercising his Option and, in addition thereto (at no additional cost), such number of shares of the class or classes in which such stock dividend or dividends were declared or paid, and such amount of cash in lieu of fractional shares, as he would have received if he had been the holder of the shares as to which he is exercising his Option at all times between the date of grant of such Option and the date of its exercise. C. If any person or entity owning restricted Common Stock obtained by exercise of an Option made hereunder receives new or additional or different shares or securities in connection with a corporate transaction described in paragraph A above or a stock dividend described in paragraph B above as a result of owning such restricted Common Stock, such new or additional or different shares or Securities shall be subject to all of the conditions and restrictions applicable to the restricted Common Stock with respect to which such shares or securities were issued. D. Notwithstanding the foregoing, any adjustments made pursuant to paragraphs A or B with respect to ISOs shall be made only after the Committee, after consulting with counsel for the Company, determines whether such adjustments would constitute a "modification" of such ISOs (as that term is defined in Section 425 of the Code) or would cause any adverse tax consequences for the Grantees of such ISOs. If the Committee determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments. E. No adjustments shall be made for dividends paid in cash or in property other than securities of the Company. -8- 9 F. No fractional shares shall be issued under the Plan. Any fractional shares which, but for this paragraph F, would have been issued to a Grantee pursuant to an Option shall be deemed to have been issued and immediately sold to the Company for their fair market value, and the Grantee shall receive from the Company cash in lieu of such fractional shares. G. Upon the happening of any of the events described in paragraphs A or B above, the class and the aggregate number of shares set forth in Section 5 hereof shall be appropriately adjusted to reflect the events described in such paragraphs. The Committee shall determine the specific adjustments to be made under this Section 14 and, subject to Section 3, its determination shall be conclusive. 15. MEANS OF EXERCISING STOCK RIGHTS. An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office address. Such notice shall identify the Option being exercised and specify the number of shares as to which such Option is being exercised, accompanied by full payment of the purchase price therefor either (a) in United States dollars in cash or by check, or (b) at the discretion of the Committee, through delivery of shares of Common Stock having fair market value equal as of the date of the exercise to the cash exercise price of the Option, or (c) at the discretion of the Committee, by delivery of the Grantee's personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in sec.1274(d) of the Code, or (d) at the discretion of the Committee, by any combination of (a), (b) and (c) above. If the Committee exercises its discretion to permit payment of the exercise price of an ISO by means of the methods set forth in clauses (b), (c), or (d) of the preceding sentence, such discretion shall be exercised in writing at the time of the grant of the ISO in question. The holder of an Option shall not have the rights of a shareholder with respect to the shares covered by his Option until the date of issuance of a stock certificate to him for such shares. Except as expressly provided above in Section 14 with respect to changes in capitalization and stock dividends, no adjustment shall be made for dividends or similar rights for which the record date is before the date such stock certificate is issued. 16. Term and Amendment of Plan. -------------------------- A. This Plan shall expire on February 14, 1996 (except as to Options outstanding on that date). Options may be granted under the Plan prior to the date of stockholder approval of the Plan. B. The Board may terminate or amend the Plan in any respect at any time, except that the Board may not (a) increase the total number of shares that may be issued under the Plan (except by adjustment Pursuant to Section 14); (b) modify the provisions of Section 4 regarding eligibility for grants of ISOs; (c) modify the provisions of Section 7(A) regarding the exercise price (except by adjustment pursuant to Section 14); or (d) extend the expiration -9- 10 date of the Plan without obtaining the approval of the Company's Stockholders within 12 months before or after any such amendment. Except as provided in the last sentence of paragraph A of this section, in no event may action of the Board or Stockholders alter or impair the rights of a Grantee, without his consent, under any Option previously granted to him. 17. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs. The Committee, at the written request of any Grantee, may in its discretion take such actions as may be necessary to convert such Grantee's ISOs (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Grantee is an employee of the Company or any Affiliate at the time of such conversion. Such actions may include, but not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such Options. At the time of such conversion, the Committee (with the consent of the Grantee) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Committee in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in this Plan shall be deemed to give any Grantee the right to have such Grantee's ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Committee takes appropriate action. The Committee, with the consent of the Grantee, may also terminate any portion of any ISO that has not been exercised at the time of such termination. 18. APPLICATION OF FUNDS. The proceeds received by the Company from the sale of shares pursuant to Options granted under the Plan shall be used for general corporate purposes. 19. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver shares of the Common Stock under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such shares. 20. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a Non-Qualified Option, the making of a Disqualifying Disposition or the vesting of restricted Common Stock acquired on the exercise of an Option hereunder, the Company, in accordance with Section 3402(a) of the Code, may require such Grantee to pay additional withholding taxes in respect of the amount that is considered compensation includable in the Grantee's gross income. The Committee in its discretion may condition the exercise of a Non-Qualified Option or the vesting of restricted Common Stock acquired by exercising an Option on the Grantee's payment of such additional withholding taxes. 21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each Stock Option Agreement entered into between the Company and the Grantee of an ISO granted under this Plan shall provide that the Grantee agrees to notify the Company in writing immediately after the Grantee makes a Disqualifying Disposition of any Common Stock acquired pursuant to the -10- 11 exercise of such ISO. A Disqualifying Disposition is any disposition (including any sale) by the Grantee of an ISO of Common Stock acquired pursuant to the exercise of such ISO before the later of (a) two years after the Date of Grant of such ISO or (b) one year after the date the Grantee acquired such Common Stock by exercising the ISO, provided, however, that the foregoing rules shall not apply to dispositions of such Common Stock after the death of such Grantee by his or her legal representative, devisees or heirs. 22. GOVERNING LAW; CONSTRUCTION. The validity and construction of the Plan and Stock Option Agreements entered into hereunder shall be governed by the laws of the Commonwealth of Massachusetts. In construing this Plan, the singular shall include the plural and the masculine gender shall include the feminine and neuter, unless the context otherwise requires. -11- EX-4.3 4 PICTURETEL/MULTILINK 1997 STOCK OPTION PLAN 1 EXHIBIT 4.3 PICTURETEL CORPORATION/MULTILINK 1987 STOCK PLAN --------------- 1. PURPOSES. This 1987 Stock Plan is designed to enable MULTILINK, INC., a Massachusetts corporation with its principal place of business located in Andover, Massachusetts (the "Company") and its Affiliates to continue to be able to attract and retain persons of ability as key employees, officers, directors and consultants and to motivate such persons to exert their best efforts on behalf of the Company and its Affiliates by providing them with opportunities to purchase stock in the Company, all in the manner provided herein. 2. Definitions. ----------- "Affiliate" means any corporation which owns fifty percent (50%) of the voting power of the Company or any other corporation (other than the Company) in an unbroken chain of corporation beginning with the Corporation if each of the corporations other than the last in such chain owns stock possessing at least fifty percent (50%) of the voting power in one of the other corporations in such chain. "Board" means the Board of Directors of the Company. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the shares of common stock of the Company ($.01 par value) and such other stock as shall be substituted therefor as provided in Section 14. "Company" shall have the meaning set forth in Section 1 hereof. "Date of Grant" means the date on which the Committee authorizes the granting of an Option or such later date as may be specified by the Committee at the time of such authorization; provided, however, that with respect to Options granted pursuant to Section 3(d) such term shall mean the date on which the granting of such Option is authorized by the Board or by the committee established pursuant to Section 3(d) to whom the Board has delegated such authority. "Disability" shall mean "Permanent and Total Disability" as defined in Section 22(e)(3) of the Code. "Disqualifying Disposition" shall have the meaning set forth in Section 21. 2 "Eligible Recipient" means a person who satisfies the eligibility requirements of Section 4 applicable to the Option proposed to be granted to him. "Grantee" means an Eligible Recipient to whom an Option has been granted under this Plan. "ISO" means an option which qualifies as an incentive stock option under Section 422A(b) of the Code. "Non-Qualified Option" means an Option which does not qualify as an ISO. "Option" means a right to purchase Common Stock granted to an Eligible Recipient pursuant to this Plan. "Plan" means the PICTURETEL CORPORATION/MULTILINK 1987 Stock Plan. "Stock Option Agreement" means the agreement executed between the Corporation and a Grantee pursuant to Section 13. 3. ADMINISTRATION OF THE PLAN. (a) The Committee shall administer the Plan and shall consist of the Board or of not less than three members of the Board who shall be appointed by and serve at the pleasure of the Board. No member of the Committee, while a member, shall be eligible to participate in the Plan except as provided in Section 3(c) hereof. Subject to ratification of the grant or authorization of each Option by the Board (if so required by applicable state law), and subject to the terms of the Plan, the Committee, if so appointed, shall have the authority to (i) determine the employees of the Company and its Affiliates (from among the class of employees eligible under Section 4 to receive ISOs) to whom ISOs may be granted and to determine (from among the class of individuals and entities eligible under Section 4 to receive Non-Qualified Options) to whom Non-Qualified Options may be granted; (ii) determine the time or times at which Options may be granted; (iii) determine the option price of shares subject to each Option; (iv) determine whether each Option granted shall be an ISO or a Non-Qualified Option; (v) determine (subject to Section 8) the time or times when each Option shall become exercisable and the duration of the exercise period; (vi) determine whether restrictions such as repurchase options are to be imposed on shares subject to Options and the nature of such restrictions, if any; and (vii) interpret the Plan and prescribe and rescind rules and regulations relating to it. If the Committee decides to grant a Non-Qualified Option, it shall take whatever actions it deems necessary, under Section 422A of the Code and the regulations promulgated thereunder, to ensure that such Option is not treated as an ISO. The interpretation and construction by the Committee of any provisions of the Plan or of any Option granted under it shall be final unless otherwise determined by the Board. The Committee may from time to time adopt such rules and regulations for carrying out the Plan as -2- 3 it may deem best. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted under it. (b) The Committee may select one of its members as its chairman, and shall hold meetings at such time and places as it may determine. A majority of the Committee shall constitute a quorum. The acts of a majority of the members of the Committee present at any meeting at which a quorum is present or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee. All references in this Plan to the Committee shall mean the Board if no Committee has been appointed. From time to time the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan. (c) Options may be granted to members of the Committee if such grants have been approved by a majority vote of the members of the Board not then serving on the Committee. All grants of Options to members of the Committee shall in all other respects be made in accordance with the provisions of this Plan applicable to other eligible persons. Members of the Board who are either (i) eligible for Options pursuant to the Plan or (ii) have been granted Options under the Plan may vote on any matters affecting the administration of the Plan or the grant of any Options pursuant to the Plan, except that no such member shall act upon the granting to himself of Options, but any such member may be counted in determining the existence of a quorum at any meeting of the Board during which action is taken with respect to the granting to him of Options. (d) Notwithstanding any other provision of this Section 3, in the event the Company registers any class of any equity security pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any grants of Options to directors made at any time from the effective date of such registration until six months after the termination of such registration shall be made only by the Board; provided, however, that if a majority of the Board is eligible to participate in the Plan or in any other stock option or other stock plan of the Company or any Affiliate, or has been so eligible at any time within the preceding year, any grant to directors of Options must be made by, or only in accordance with the recommendation of, a committee consisting of three or more persons, who may but need not be directors or employees of the Company, appointed by the Board but having full authority to act in the matter, none of whom is eligible to participate in this Plan or any other stock option or other stock plan of the Company or any Affiliate, or has been eligible at any time within the preceding year. The requirements imposed by the preceding sentence shall also apply with respect to grants to officers who are not also directors. Once appointed, such committee shall continue to serve until otherwise directed by the Board. 4. ELIGIBILITY REQUIREMENTS. ISOs may be granted to any employee of the Company or any Affiliate. Those officers and directors of the Company or any Affiliate who -3- 4 are not employees may not be granted ISOs under the Plan. Non-qualified Options may be granted to any director (whether or not an employee), officer, employee or consultant of the Company or any Affiliate. The Committee may take into consideration a candidate's individual circumstances in determining whether to grant an ISO or a Non-Qualified Option. The granting of any Option to any individual or entity shall neither entitle that individual or entity to, nor disqualify him from, participation in any other grant of Options. 5. STOCK. The aggregate number of shares of Common Stock which may be issued pursuant to the Plan is 100,000, subject to adjustment as provided in Section 14. The Committee may grant ISOs and Non-Qualified Options with respect to such shares in such combinations and for such amount of shares as it shall desire, provided that the number of shares issuable upon exercise of such Options does not exceed such number, as adjusted. Stock subject to Options may be authorized but unissued shares of Common Stock or Common Stock held in the treasury of the Company. If any Option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the unpurchased shares subject to such Option shall again be available for grants of Options under the Plan. 6. GRANTING OF OPTIONS. The Committee is authorized to grant Options under the Plan at such time or times as it may determine, provided that the Committee shall not grant Options under the Plan after February 11, 1997. The Committee shall have the right, with the consent of the Grantee, to convert an ISO granted under the Plan to a Non-Qualified Option pursuant to Article 17. 7. Minimum Option Price; ISO Limitations. ------------------------------------- A. The exercise price specified in the Stock Option Agreement relating to each ISO granted under the Plan shall not be less than the fair market value per share of Common Stock on the Date of Grant. In the case of an ISO to be granted to an Eligible Recipient owning stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Affiliate, the exercise price specified in the Stock Option Agreement relating to such ISO shall not be less than 110 percent of the fair market value per share of Common Stock on the Date of Grant. B. In no event shall the aggregate fair market value (determined at the time an ISO is granted) of Common Stock for which ISOs granted to any Eligible Recipient are exercisable for the first time by such Eligible Recipient during any calendar year (under all stock option plans of the Company and any Affiliate) exceed $100,000. C. If on the Date of Grant the Company's Common Stock is publicly traded, "fair market value" shall be determined as of the last business day for which the prices or quotes discussed in this sentence are available prior to the Date of Grant and shall mean (i) the average (on that date) of the high and low prices of the Common -4- 5 Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; or (ii) the last reported sale price (on that date) of the Common Stock on the NASDAQ National Market System, if the Common Stock is not then traded on a national securities exchange; or (iii) the closing bid price (or average of bid prices) last quoted (on that date) by an established quotation service for over-the-counter securities, if the Common Stock is not reported on the NASDAQ National Market System. However, if the Common Stock is not publicly traded on the Date of Grant, "fair market value" shall be deemed to be the fair value of the Common Stock on the Date of Grant as determined by the Committee after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm's length. 8. OPTION DURATION. Subject to earlier termination as provided in Sections 10 and 11, each Option shall expire on the date specified by the Committee, but not more than (i) ten years and one day from the Date of Grant in the case of Non-Qualified Options, (ii) ten years from the Date of Grant in the case of ISOs generally, and (iii) five years from the Date of Grant in the case of ISOs granted to an employee owning stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Affiliate. Subject to earlier termination as provided in Sections 10 and 11, the term of each ISO shall be the term set forth in the Stock Option Agreement granting such ISO, unless any part of such ISO is converted into a Non-Qualified Option pursuant to Section 17 and pursuant to such conversion the Committee elects to extend the exercise period applicable to such part. 9. EXERCISE OF OPTION. Subject to the provisions of Sections 10 through 13, each Option granted under the Plan shall be exercisable as follows: A. The Option shall either be fully exercisable on the Date of Grant or shall become exercisable thereafter in such installments as the Committee may specify. B. Once an installment becomes exercisable it shall remain exercisable until expiration or termination of the Option, unless otherwise specified by the Committee. C. Each Option or installment may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares with respect to which it is then exercisable. D. The Committee shall have the right to accelerate the date of exercise of any installment of any Option; provided that the Committee shall not accelerate the exercise date of any installment of any Option granted to any employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to paragraph Section 17) if such acceleration would violate the annual vesting limitation contained in Section 422A(b)(7) of the Code, as described in Section 7(B). -5- 6 10. TERMINATION OF EMPLOYMENT. If the Grantee of an ISO ceases to be employed by the Company and all Affiliates other than by reason of death or disability, no further installments of such Grantee's ISOs shall become exercisable, and the Grantee's ISOs shall terminate after the passage of 90 days from the date of termination of his or her employment, but in no event later than on their specified expiration dates, except to the extent that such ISOs (or unexercised installments thereof) have been converted into Non-Qualified Options pursuant to Section 17. Leave of absence with the written approval of the Committee shall not be considered an interruption of employment under the Plan, provided that such written approval contractually obligates the Company or any Affiliate to continue the employment of the employee after the approved period of absence. Employment shall also be considered as continuing uninterrupted during any other bona fide leave of absence (such as those attributable to illness, military obligations or governmental service) provided that the period of such leave does not exceed 90 days or, if longer, any period during which such Grantee's right to reemployment is guaranteed by statute. ISOs granted under the Plan shall not be affected by any change of employment within or among the Company and its Affiliates, so long as the Grantee continues to be an employee of the Company or any Affiliate. Nothing in the Plan shall be deemed to give any Grantee of any Option the right to be retained in employment or other service by the Company or any Affiliate for any period of time. 11. DEATH; DISABILITY. If the Grantee of an ISO ceases to be employed by the Company and all Affiliates by reason of his death, any ISO previously granted hereunder to such Grantee may be exercised, to the extent of the number of shares with respect to which the Grantee could have exercised it on the date of his or her death, by the Grantee's estate, personal representative or any beneficiary who has acquired the ISO by will or by the laws of descent and distribution, at any time prior to the earlier of the ISO's specified expiration date or 365 days from the date of the Grantee's death. If the Grantee of an ISO ceases to be employed by the Company and all Affiliates by reason of his Disability, the Grantee shall have the right to exercise any ISO held by him on the date of termination of employment, to the extent of the number of shares with respect to which the Grantee could have exercised it on that date, at any time prior to the earlier of the ISO's specified expiration date or 365 days from the date of the termination of the Grantee employment. 12. ASSIGNABILITY. No Option shall be assignable or transferable by the Grantee thereof except by will or by the laws of descent and distribution, and during the lifetime of the Grantee each Option shall be exercisable only by him. 13. TERMS AND CONDITIONS OF OPTIONS. Each Option granted under the Plan shall be evidenced by a Stock Option Agreement in such form as the Committee may from time to time approve. Each Stock Option Agreement shall conform to the terms and conditions set forth in Sections 7 through 12 hereof and may contain such other provisions (which may vary as -6- 7 between Grantees) as the Committee deems advisable, including restrictions applicable to shares of Common Stock issuable upon exercise of Options, provided such provisions are not inconsistent with the terms of this Plan. The Committee may, in its discretion, make some or all of the Non-Qualified Options granted under this Plan subject to the restrictions set forth herein with respect to ISOs, or to such other termination and cancellation provisions as the Committee may determine. The Committee may from time to time confer authority and responsibility on one or more of its own members and/or one or more officers of the Company to execute and deliver Stock Option Agreements. The proper officers of the Company are authorized and directed to take any and all action necessary or advisable from time to time to carry out the terms of each Stock Option Agreement entered into pursuant to this Plan. 14. ADJUSTMENTS. Upon the happening of any of the following described events, a Grantee's rights with respect to Options granted hereunder and with respect to Common Stock acquired pursuant to exercise of an Option granted hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in any written agreement between the Grantee and the Company relating to such Option. A. In the event shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if, upon a merger, consolidation, reorganization, split-up, liquidation, combination, recapitalization or the like of the Company, the shares of Common Stock shall be exchanged for other securities of the Company or of another corporation, each Grantee of an Option shall be entitled, subject to the conditions herein stated, to purchase such number of shares of Common Stock or amount of other securities of the Company or such other corporation as were exchangeable for the number of shares of Common Stock which such Grantee would have been entitled to purchase except for such action, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or exchange; and B. In the event the Company shall issue any of its shares as a stock dividend upon or with respect to the shares of stock of the class which at the time shall be subject to an Option hereunder, each Grantee upon exercising an Option shall be entitled to receive (for the purchase price paid upon such exercise) the shares as to which he is exercising his Option and, in addition thereto (at no additional cost), such number of shares of the class or classes in which such stock dividend or dividends were declared or paid, and such amount of cash in lieu of fractional shares, as he would have received if he had been the holder of the shares as to which he is exercising his Option at all times between the date of grant of such Option and the date of its exercise. C. If any person or entity owning restricted Common Stock obtained by exercise of an Option made hereunder receives new or additional or different shares or securities in connection with a corporate transaction described in paragraph A above or a stock dividend described in paragraph B above as a result of owning such restricted -7- 8 Common Stock, such new or additional or different shares or securities shall be subject to all of the conditions and restrictions applicable to the restricted Common Stock with respect to which such shares or securities were issued. D. Notwithstanding the foregoing, any adjustment made pursuant to paragraphs A or B with respect to ISOs shall be made only after the Committee, after consulting with counsel for the Company, determines whether such adjustments would constitute a "modification" of such ISOs (as that term is defined in Section 425 of the Code) or would cause any adverse tax consequences for the Grantees of such ISOs. If the Committee determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments. E. No adjustments shall be made for dividends paid in cash or in property other than securities of the Company. F. No fractional shares shall be issued under the Plan. Any fractional shares which, but for this paragraph F, would have been issued to a Grantee pursuant to an Option shall be deemed to have been issued and immediately sold to the Company for their fair market value, and the Grantee shall receive from the Company cash in lieu of such fractional shares. G. Upon the happening of any of the events described in paragraphs A or B above, the class and the aggregate number of shares set forth in Section 5 hereof shall be appropriately adjusted to reflect the events described in such paragraphs. The Committee shall determine the specific adjustments to be made under this Section 14 and, subject to Section 3, its determination shall be conclusive. 15. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office address. Such notice shall identify the Option being exercised and specify the number of shares as to which such Option is being exercised, accompanied by full payment of the purchase price therefor either (a) in United States dollars in cash or by check, or (b) at the discretion of the Committee, through delivery of shares of Common Stock having fair market value equal as of the date of the exercise to the cash exercise price of the Option, or (c) at the discretion of the Committee, by delivery of the Grantee's personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in sec.1274(d) of the Code, or (d) at the discretion of the Committee, by any combination of (a), (b) and (c) above. If the Committee exercises its discretion to permit payment of the exercise price of an ISO by means of the methods set forth in clauses (b), (c) or (d) of the preceding sentence, such discretion shall be exercised in writing at the time of the grant of the ISO in question. The holder of an Option shall not have the rights of a shareholder with respect to the shares covered by his Option until the date of issuance of a stock certificate to him for such shares. Except as expressly provided above in Section 14 with respect to changes in capitalization and -8- 9 stock dividends, no adjustment shall be made for dividends or similar rights for which the record date is before the date such stock certificate is issued. 16. Term and Amendment of Plan. -------------------------- A. This plan was adopted by the Board and approved by the holders of a majority of the outstanding shares of Common Stock and Preferred Stock of the Company on February 12, 1987. The Plan shall expire on February 11, 1997 (except as to Options outstanding on that date). Options may be granted under the Plan prior to the date of stockholder approval of the Plan. B. The Board may terminate or amend the Plan in any respect at any time, except that the Board may not (a) increase the total number of shares that may be issued under the Plan (except by adjustment pursuant to Section 14); (b) modify the provisions of Section 4 regarding eligibility for grants of ISOs; (c) modify the provisions of Section 7(A) regarding the exercise price (except by adjustment pursuant to Section 14); or (d) extend the expiration date of the Plan without obtaining the approval of the Company's Stockholders within 12 months before or after any such amendment. Except as provided in the last sentence of paragraph A of this section, in no event may action of the Board or Stockholders alter or impair the rights of a Grantee, without his consent, under any Option previously granted to him. 17. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs. The Committee, at the written request of any Grantee, may in its discretion take such actions as may be necessary to convert such Grantee's ISOs (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Grantee is an employee of the Company or any Affiliate at the time of such conversion. Such actions may include, but not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such Options. At the time of such conversion, the Committee (with the consent of the Grantee) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Committee in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in this Plan shall be deemed to give any Grantee the right to have such Grantee's ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Committee takes appropriate action. The Committee, with the consent of the Grantee, may also terminate any portion of any ISO that has not been exercised at the time of such termination. 18. APPLICATION OF FUNDS. The proceeds received by the Company from the sale of shares pursuant to Options granted under the Plan shall be used for general corporate purposes. -9- 10 19. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver shares of the Common Stock under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such shares. 20. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a Non-Qualified Option, the making of a Disqualifying Disposition or the vesting of restricted Common Stock acquired on the exercise of an Option hereunder, the Company, in accordance with Section 3402(a) of the Code, may require such Grantee to pay additional withholding taxes in respect of the amount that is considered compensation includable in the Grantee's gross income. The Committee in its discretion may condition the exercise of a Non-Qualified Option or the vesting of restricted Common Stock acquired by exercising an Option on the Grantee's payment of such additional withholding taxes. 21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each Stock Option Agreement entered into between the Company and the Grantee of an ISO granted under this Plan shall provide that the Grantee agrees to notify the Company in writing immediately after the Grantee makes a Disqualifying Disposition of any Common Stock acquired pursuant to the exercise of such ISO. A Disqualifying Disposition is any disposition (including any sale) by the Grantee of an ISO of Common Stock acquired pursuant to the exercise of such ISO before the later of (a) two years after the Date of Grant of such ISO or (b) one year after the date the Grantee acquired such Common Stock by exercising the ISO, provided, however, that the foregoing rules shall not apply to dispositions of such Common Stock after the death of such Grantee by his or her legal representative, devisees or heirs. 22. GOVERNING LAW; CONSTRUCTION. The validity and construction of the Plan and Stock Option Agreements entered into hereunder shall be governed by the laws of the Commonwealth of Massachusetts. In construing this Plan, the singular shall include the plural and the masculine gender shall include the feminine and neuter, unless the context otherwise requires. -10- EX-4.4 5 PICTURETEL/MULTILINK 1996 STOCK OPTION PLAN 1 EXHIBIT 4.4 PICTURETEL CORPORATION/MULTILINK 1996 STOCK OPTION PLAN ---------------------- 1. PURPOSE. The purpose of this 1996 Stock Option Plan (the "Plan") is to encourage employees of MultiLink, Inc. (the "Company") and of any present or future parent or subsidiary of the Company (collectively, "Related Corporations"), and other individuals who render services to the Company or a Related Corporation, by providing opportunities to purchase stock in the Company pursuant to options granted hereunder which qualify as "incentive stock options" ("ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code") and options which do not qualify as ISOs ("Non-Qualified Options"). Both ISOs and Non-Qualified Options are referred to hereafter individually as an "Option" and collectively as "Options." As used herein, the terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary corporation," respectively, as those terms are defined in Section 424 of the Code. 2. ADMINISTRATION OF THE PLAN. -------------------------- A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered by the Board of Directors of the Company (the "Board") or by a committee appointed by the Board (the "Committee"); provided that the Plan shall be administered [: (i) to the extent required by applicable regulations under Section 162(m) of the Code, by two or more "outside directors" (as defined in the applicable regulations thereunder), and (ii)] to the extent required by Rule 16b-3 promulgated under the Securities Exchange Act of 1934 or any successor provision ("Rule 16b-3"), with respect to specific grants of Options, by a disinterested administrator or administrators within the meaning of Rule 16b-3. Hereinafter, all references in this Plan to the "Committee" shall mean the Board if no Committee has been appointed. Subject to ratification of the grant or authorization of each Option by the Board (if so required by applicable state law), and subject to the terms of the Plan, the Committee shall have the authority to (i) determine to whom (from among the class of employees eligible under paragraph 3 to receive ISOs) (ISOs shall be granted, and to whom (from among the class of individuals and entities eligible under paragraph 3 to receive Non-Qualified Options) Non-Qualified Options may be granted; (ii) determine the time or times at which Options shall be granted; (iii) determine the exercise price of shares subject to each Option, which price shall not be less than the minimum price specified in paragraph 6; (iv) determine whether each Option granted shall be an ISO or a Non-Qualified Option; (v) determine (subject to paragraph 7) the time or times when each Option shall become exercisable and the duration of the exercisable period; (vi) extend the period during which 2 outstanding Options may be exercised; (vii) determine whether restrictions such as repurchase options are to be imposed on shares subject to Options and the nature of such restrictions, if any; and (viii) interpret the Plan and prescribe and rescind rules and regulations relating to it. If the Committee determines to issue a Non-Qualified Option, it shall take whatever actions it deems necessary, under Section 422 of the Code and the regulations promulgated thereunder, to ensure that such Option is not treated as an ISO. The interpretation and construction by the Committee of any provisions of the Plan or of any Option granted under it shall be final unless otherwise determined by the Board. The Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may deem advisable. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted under it. B. COMMITTEE ACTIONS. The Committee may select one of its members as its chairman, and shall hold meetings at such time and places as it may determine. A majority of the Committee shall constitute a quorum and acts by a majority of the members of the Committee at a meeting at which a quorum is present, or acts reduced to or approved in writing by a majority of the members of the Committee (if consistent with applicable state law), shall constitute the valid acts of the Committee. From time to time the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan. C. GRANT OF OPTIONS TO BOARD MEMBERS. Subject to the provisions of the first sentence of paragraph 2(A) above, if applicable, Options may be granted to members of the Board. All grants of Options to members of the Board shall in all other respects be made in accordance with the provisions of this Plan applicable to other eligible persons. Consistent with the provisions of the first sentence of paragraph 2(A) above, members of the Board who either (i) are eligible to receive grants of Options pursuant to the Plan or (ii) have been granted Options may vote on any matters affecting the administration of the Plan or the grant of any Options pursuant to the Plan, except that no such member shall act upon the granting to himself or herself of Options, but any such member may be counted in determining the existence of a quorum at any meeting of the Board during which action is taken with respect to the granting to such member of Options. 3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to employees of the Company or any Related Corporation. Non-Qualified Options may be granted to any employee, officer or director (whether or not also an employee) or consultant of the Company or any Related Corporation. The Committee may take into consideration a recipient's individual circumstances in determining whether to grant an ISO or a Non-Qualified Option. The granting of any Option to any individual or entity shall neither entitle that individual or -2- 3 entity to, nor disqualify such individual or entity from, participation in any other grant of Options. 4. STOCK. The stock subject to Options shall be authorized but unissued shares of Common Stock of the Company, par value $ 0.01 per share (the "Common Stock"), or shares of Common Stock reacquired by the Company in any manner. The aggregate number of shares which may be issued pursuant to the Plan is 600,000, subject to adjustment as provided in paragraph 13. If any Option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part or shall be repurchased by the Company, the shares subject to such Option shall again be available for grants of Options under the Plan. [No employee of the Company or any Related Corporation may be granted Options to acquire, in the aggregate, more than [NUMBER] of shares of Common Stock under the Plan. If any Option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part or shall be repurchased by the Company, the shares subject to such Option shall be included in the determination of the aggregate number of shares of Common Stock deemed to have been granted to such employee under the Plan.] 5. GRANTING OPTIONS. Options may be granted under the Plan at any time after [MONTH DAY], 1996 and prior to [DATE TEN YEARS OR LESS AFTER DATE BOARD ADOPTS PLAN]. The date of grant of an Option under the Plan will be the date specified by the Committee at the time it grants the Option; provided, however, that such date shall not be prior to the date on which the Committee acts to approve the grant. [Options granted under the Plan are intended to qualify as performance-based compensation to the extent required under proposed Treasury Regulation 1.162-27.] 6. MINIMUM OPTION PRICE; ISO LIMITATIONS. ------------------------------------- A. PRICE FOR NON-QUALIFIED OPTIONS. The exercise price per share specified in the agreement relating to each Non-Qualified Option granted under the Plan shall in no event be less than the minimum legal consideration required therefor under the laws of any jurisdiction in which the Company or its successors in interest may be organized. [Non-Qualified Options granted under the Plan, with an exercise price less than the fair market value per share of Common Stock on the date of grant, are intended to qualify as performance-based compensation under Section 162(m) of the Code and any applicable regulations thereunder. Any such Non-Qualified Options granted under the Plan shall be exercisable only upon the attainment of a pre-established, objective performance goal established by the Committee. If the Committee grants Non-Qualified Options with an exercise price less than the fair market value per share of Common Stock on the date of grant, such grant will be submitted for, and will be contingent upon shareholder approval.] -3- 4 B. PRICE FOR ISOs. The exercise price per share specified in the agreement relating to each ISO granted under the Plan shall not be less than the fair market value per share of Common Stock on the date of such grant. In the case of an ISO to be granted to an employee owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Related Corporation, the price per share specified in the agreement relating to such ISO shall not be less than one hundred ten percent (110%) of the fair market value per share of Common Stock on the date of grant. For purposes of determining stock ownership under this paragraph, the rules of Section 424(d) of the Code shall apply. C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible employee may be granted Options treated as ISOs only to the extent that, in the aggregate under this Plan and all incentive stock option plans of the Company and any Related Corporation, ISOs do not become exercisable for the first time by such employee during any calendar year with respect to stock having a fair market value (determined at the time the ISOs were granted) in excess of $100,000. The Company intends to designate any Options granted in excess of such limitation as Non-Qualified Options. D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is granted under the Plan, the Company's Common Stock is publicly traded, "fair market value" shall be determined as of the date of grant or, if the [prices or quotes discussed in this sentence are unavailable for such date, the last business day for which such prices or quotes are available prior to the date of grant and shall mean (i) the average (on that date) of the high and low prices of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; or (ii) the last reported sale price (on that date) of the Common Stock on the Nasdaq National Market, if the Common Stock is not then traded on a national securities exchange; or (iii) the closing bid price (or average of bid prices) last quoted (on that date) by an established quotation service for over-the-counter securities, if the Common Stock is note reported on the Nasdaq National Market. If the Common Stock is not publicly traded at the time an Option is granted under the Plan, "fair market value" shall be deemed to be the fair value of the Common Stock as determined by the Committee after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm's length. 7. OPTION DURATION. Subject to earlier termination as provided in paragraphs 9 and 10 or in the agreement relating to such Option, each Option shall expire on the date -4- 5 specified by the Committee, but not more than (i) ten years from the date of grant in the case of Options generally and (ii) five years from the date of grant in the case of ISOs granted to an employee owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Related Corporation, as determined under paragraph 6(B). Subject to earlier termination as provided in paragraphs 9 and 10, the term of each ISO shall be the term set forth in the original instrument granted such ISO, except with respect to any part of such ISO that is converted into a Non-Qualified Option pursuant to paragraph 16. 8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through 12, each Option granted under the Plan shall be exercisable as follows: A. VESTING. The Option shall either be fully exercisable on the date of grant or shall become exercisable thereafter in such installments as the Committee may specify. B. FULL VESTING OF INSTALLMENTS. Once an installment becomes exercisable it shall remain exercisable until expiration or termination of the Option, unless otherwise specified by the Committee. C. PARTIAL EXERCISE. Each Option or installment may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares with respect to which it is then exercisable. D. ACCELERATION OF VESTING. The Committee shall have the right to accelerate the date on which any installment of any Option becomes exercisable; provided that the Committee shall not, without the consent of an optionee, accelerate the permitted exercise date of any installment of any Option granted to any employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to paragraph 16) if such acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code, as described in paragraph 6(C). 9. TERMINATION OF EMPLOYMENT. Unless otherwise specified in the agreement relating to such ISO, if an ISO optionee ceases to be employed by the Company and all Related Corporations other than by reason of death or disability as defined in paragraph 10, no further installments of his or her ISOs shall become exercisable, and his or her ISOs shall terminate after the passage of three months from the date of termination of his or her employment, but in no event later than on their specified expiration dates, except to the extent that such ISOs (or unexercised installments thereof) have been converted into Non-Qualified Options pursuant to paragraph 16. For purposes of this paragraph 9, employment shall be considered as continuing uninterrupted during any bona fide leave of absence (such as those attributable to illness, military obligations or governmental service) provided that the period of such leave does not exceed 90 days or, if longer, any period during which such optionee's right to reemployment is guaranteed by statute. A bona fide leave of absence with the written -5- 6 approval of the Committee shall not be considered an interruption of employment under this paragraph 9, provided that such written approval contractually obligates the Company or any Related Corporation to continue the employment of the optionee after the approved period of absence. ISOs granted under the Plan shall not be affected by any change of employment within or among the Company and Related Corporations, so long as the optionee continues to be an employee of the Company or any Related Corporation. Nothing in the Plan shall be deemed to give any optionee the right to be retained in employment or other service by the Company or any Related Corporation for any period of time. 10. DEATH; DISABILITY. ----------------- A. DEATH. If an ISO optionee ceases to be employed by the Company and all Related Corporations by reason of his or her death, any ISO owned by such optionee may be exercised, to the extent otherwise exercisable on the date of death, by the estate, personal representative or beneficiary who has acquired the ISO by will or by the laws of descent and distribution, until the earlier of (i) the specified expiration date of the ISO or (ii) 180 days from the date of the optionee's death. B. DISABILITY. If an ISO optionee ceases to be employed by the Company and all Related Corporations by reason of his or her disability, such optionee shall have the right to exercise any ISO held by him or her on the date of termination of employment, to the extent of the number of shares with respect to which he or she could have exercised it on that date, until the earlier of (i) the specified expiration date of the ISO or (ii) 180 days from the date of the termination of the optionee's employment. For the purposes of the Plan, the term "disability" shall mean "permanent and total disability" as defined in Section 22(e)(3) of the Code or any successor statute. 11. ASSIGNABILITY. No Option shall be assignable or transferable by the optionee except by will, by the laws of descent and distribution [or, in the case of Non-Qualified Options only, pursuant to a valid domestic relations order]. Except as set forth in the preceding sentence, during the lifetime of an optionee each Option shall be exercisable only by such optionee. 12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by instruments (which need not be identical) in such forms as the Committee may from time to time approve. Such instruments shall conform to the terms and conditions set forth in paragraphs 6 through 11 hereof and may contain such other provisions as the Committee deems advisable which are not inconsistent with the Plan, including restrictions applicable to shares of Common Stock issuable upon exercise of Options. The Committee may specify that any Non-Qualified Option shall be subject to the restrictions set forth herein with respect to ISOs, or to such other termination and cancellation provisions as the Committee may determine. The Committee may from time to time confer authority and responsibility on one or more of its own members and/or one or more officers of the Company to execute and deliver such instruments. The -6- 7 proper officers of the Company are authorized and directed to take any and all action necessary or advisable form time to time to carry out the terms of such instruments. 13. ADJUSTMENTS. Upon the occurrence of any of the following events, an optionee's rights with respect to Options granted to such optionee hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in the written agreement between the optionee and the Company relating to such Option: A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, the number of shares of Common Stock deliverable upon the exercise of Options shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or stock dividend. B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated with or acquired by another entity in a merger or other reorganization in which the holders of the outstanding voting stock of the Company immediately preceding the consummation of such event, shall, immediately following such event, hold, as a group, less than a majority of the voting securities of the surviving or successor entity, or in the event of a sale of all or substantially all of the Company's assets or otherwise (each, an "Acquisition"), the Committee or the board of directors of any entity assuming the obligations of the Company hereunder (the "Successor Board"), shall, as to outstanding Options, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the shares then subject to such Options either (a) the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition, (b) shares of stock of the surviving or successor corporation or (c) such other securities as the Successor Board deems appropriate, the fair market value of which shall not materially exceed the fair market value of the shares of Common Stock subject to such Options immediately preceding the Acquisition; or (ii) upon written notice to the optionees, provide that all Options must be exercised, to the extent then exercisable or to be exercisable as a result of the Acquisition, within a specified number of days of the date of such notice, at the end of which period the Options shall terminate; or (iii) terminate all Options in exchange for a cash payment equal to the excess of the fair market value of the shares subject to such Options (to the extent then exercisable or to be exercisable as a result of the Acquisition) over the exercise price thereof. C. RECAPITALIZATION OR REORGANIZATION. In the event of a recapitalization or reorganization of the Company (other than a transaction described in subparagraph B above) pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, an optionee upon -7- 8 exercising an Option shall be entitled to receive for the purchase price paid upon such exercise the securities he or she would have received if he or she had exercised such Option prior to such recapitalization or reorganization. D. MODIFICATION OF ISOs. Notwithstanding the foregoing, any adjustments made pursuant to subparagraphs A, B or C with respect to ISOs shall be made only after the Committee, after consulting with counsel for the Company, determines whether such adjustments would constitute a "modification" of such ISOs (as that term is defined in Section 424 of the Code) or would cause any adverse tax consequences for the holders of such ISOs. If the Committee determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs or would cause adverse tax consequences to the holders, it may refrain from making such adjustments. E. DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution or liquidation of the Company, each Option will terminate immediately prior to the consummation of such proposed action or at such other time and subject to such other conditions as shall be determined by the Committee. F. ISSUANCES OF SECURITIES. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Options. No adjustments shall be made for dividends paid in cash or in property other than securities of the Company. G. FRACTIONAL SHARES. No fractional shares shall be issued under the Plan and the optionee shall receive from the Company cash in lieu of such fractional shares. H. ADJUSTMENTS. Upon the happening of any of the events described in subparagraphs A, B or C above, the class and aggregate number of shares set forth in paragraph 4 hereof that are subject to Options which previously have been or subsequently may be granted under the Plan shall also be appropriately adjusted to reflect the events described in such subparagraphs. The Committee or the Successor Board shall determine the specific adjustments to be made under this paragraph 13 and, subject to paragraph 2, its determination shall be conclusive. 14. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office address, or to such transfer agent as the Company shall designate. Such notice shall identify the Option being exercised and specify the number of shares as to which such Options is being exercised, accompanied by full payment of the purchase price therefor either (a) in United States dollars in cash or by check, (b) at the discretion of the Committee, through delivery of shares of Common Stock having a fair market value equal as of the date of the exercise to the cash -8- 9 exercise price of the Option, (c) at the discretion of the Committee, by delivery of the optionee's personal recourse note bearing interest payable not less than annually at no less than 100% of the lowest applicable Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion of the committee and consistent with applicable law, through the delivery of an assignment to the Company of a sufficient amount of the proceeds from the sale of the Common Stock acquired upon exercise of the Option and an authorization to the broker or selling agent to pay that amount to the Company, which sale shall be at the participant's direction at the time of exercise, or (e) at the discretion of the Committee, by any combination of (a), (b), (c) and (d) above. If the Committee exercises its discretion to permit payment of the exercise price of an ISO by means of the methods set forth in clauses (b), (c), (d) or (e) of the preceding sentence, such discretion shall be exercised in writing at the time of the grant of the ISO in question. The holder of a Option shall not have the rights of a shareholder with respect to the shares covered by his Option until the date of issuance of a stock certificate to such holder for such shares. Except as expressly provided above in paragraph 13 with respect to changes in capitalization and stock and dividends, no adjustment shall be made for dividends or similar rights for which the record date is before the date of such stock certificate is issued. 15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on [month day], 1996, subject, with respect to the validation of ISOs granted under the Plan, to approval of the Plan by the stockholders of the Company at the next Meeting of Stockholders or, in lieu thereof, by written consent. If the approval of stockholders is not obtained prior to [same month and day], 1996, any grants of ISOs under the Plan made prior to that date will be rescinded. The Plan shall expire at the end of the day on [date less than ten years after date Board adopts Plan] (except as to Options outstanding on that date). Subject to the provisions of paragraph 5 above, Options may be granted under the Plan prior to the date of stockholder approval of the Plan. The Board may terminate or amend the Plan in any respect at any time, except that, without the approval of the stockholders obtained within 12 months before or after the Board adopts a resolution authorizing any of the following actions: (a) the total number of shares that may be issued under the Plan may not be increased (except by adjustment pursuant to paragraph 13); (b) the benefits accruing to participants under the Plan may not be materially increased; (c) the requirements as to eligibility for participation in the Plan may not be materially modified; (d) the provisions of paragraph 3 regarding eligibility for grants of ISOs may not be modified; (e) the provisions of paragraph 6(B) regarding the exercise price at which shares may be offered pursuant to ISOs may not be modified (except by adjustment pursuant to paragraph 13); (f) the expiration date of the Plan may not be extended; and (g) the Board may not take any action which would cause the Plan to fail to comply with Rule 16b-3. Except as otherwise provided in this paragraph 15, in no event may action of the Board or stockholders alter or impair the rights of an optionee, without such optionee's consent, under any Option previously granted to such optionee. 16. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS. The Committee, at the written request or with the written consent of any optionee, may in its discretion take such -9- 10 actions as may be necessary to convert such optionee's ISOs (or any installments or portions or installments thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the optionee is an employee of the Company or a Related Corporation at the time of such conversion. Such actions may include, but shall not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such ISOs. At the time of such conversion, the Committee (with the consent of the optionee) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Committee in its discretion may determine, provided that such conditions shall not be inconsistent with the Plan. Nothing in the Plan shall be deemed to give any optionee the right to have such optionee's ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Committee takes appropriate action. 17. APPLICATION OF FUNDS. The proceeds received by the Company from the sale of shares pursuant to Options granted under the Plan shall be used for general corporate purposes. 18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO granted under the Plan, each optionee agrees to notify the Company in writing immediately after such optionee makes a Disqualifying Disposition (as described in Sections 421, 422 and 424 of the Code and regulations thereunder) of any stock acquired pursuant to the exercise of ISOs granted under the Plan. A Disqualifying Disposition is generally any disposition occurring on or before the later of (a) the date two years following the date the ISO was granted or (b) the date one year following the date the ISO was exercised. 19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of Non-Qualified Option, the making of a Disqualifying Disposition (as defined in paragraph 18), the vesting or transfer of restricted stock or securities acquired on the exercise of a Option hereunder, or the making of a distribution or other payment with respect to such stock or securities, the Company may withhold taxes in respect of amounts that constitute compensation includible in gross income. The Committee in its discretion may condition (i) the exercise of an Option, or (ii) the vesting or transferability of restricted stock or securities acquired by exercising an Option, on the optionee's making satisfactory arrangement for such withholding. Such arrangement may include payment by the optionee in cash or by check of the amount of the withholding taxes or, at the discretion of the Committee, by the optionee's delivery of previously held shares of Common Stock or the withholding from the shares of Common Stock otherwise deliverable upon exercise of a Option shares having an aggregate fair market value equal to the amount of such withholding taxes. 20. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver shares of the Common Stock under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such shares. -10- 11 Government regulations may impose reporting or other obligations on the Company with respect to the Plan. For example, the Company may be required to send tax information statements to employees and former employees that exercise ISOs under the Plan, and the Company may be required to file tax information returns reporting the income received by optionees in connection with the Plan. 21. GOVERNING LAW. The validity and construction of the Plan and the instruments evidencing Options shall be governed by the laws of Massachusetts, or the laws of any jurisdiction in which the Company or its successors in interest may be organized. -11- EX-5.1 6 OPINION OF ROPES & GRAY 1 EXHIBIT 5.1 ROPES & GRAY One International Place Boston, Massachusetts 02110-2624 Tel. (617) 951-7000 July 22, 1997 PictureTel Corporation 100 Minuteman Road Andover, Massachusetts 01810 Re: Registration Statement on Form S-8 ---------------------------------- Ladies and Gentlemen: This opinion is furnished to you in connection with a registration statement on Form S-8 (the "Registration Statement"), filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended, for the registration of up to 580,535 shares of Common Stock, $.01 par value per share (the "Shares"), of PictureTel Corporation (the "Company") issuable under the PictureTel Corporation/MultiLink Incentive Stock Option Plan of 1984, PictureTel Corporation/MultiLink Incentive Stock Option Plan of 1986, PictureTel Corporation/MultiLink 1987 Stock Option Plan and PictureTel Corporation/MultiLink 1996 Stock Option Plan (collectively, the "Plans"). We have acted as counsel for the Company in connection with the Plans and are familiar with the actions taken by the Company in connection therewith. For purposes of this opinion, we have examined copies of the Registration Statement, the Plans and such other documents as we have deemed appropriate. Based upon the foregoing, we are of the opinion that the Shares have been duly authorized and that when issued and sold in accordance with the terms of the Plans will have been validly issued and will be fully paid and non-assessable. We hereby consent to the filing of this opinion as part of the Registration Statement. Very truly yours, /s/ Ropes & Gray ------------------------- Ropes & Gray EX-23.2 7 CONSENT OF COOPERS & LYBRAND 1 EXHIBIT 23.2 COOPERS & LYBRAND CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Registration Statement on Form S-8, of our reports dated February 12, 1997, on our audits of the consolidated financial statements and financial statement schedule of PictureTel Corporation. We also consent to the reference to our firm under the caption "Experts." /s/ Coopers & Lybrand L.L.P. -------------------------------- Coopers & Lybrand L.L.P. Certified Public Accountants Boston, Massachusetts July 21, 1997 -----END PRIVACY-ENHANCED MESSAGE-----